- The Volkswagen Group wants to sell ‘smart cars’ in Europe and the United States.
- China’s Ecarx will lend a hand with its proprietary hardware and software.
- One problem: the U.S. has an aggressive ban on Chinese-developed software for cars.
China’s car companies are way ahead of traditional American and European automakers when it comes to software. It’s something many industry experts, including some top-tier execs, have admitted to.
It’s one of the reasons why legacy companies have had a tough time convincing Chinese buyers to buy their cars instead of the local alternatives. This includes Tesla, which may be viewed as forward-looking in Western countries thanks to its software suite, but in China, it has relied on heavy price reductions and affordable financing to sell cars. When it comes to software, its Chinese rivals, like BYD and Geely, are several steps ahead.
Now, Volkswagen is looking to China to make things better. After investing a healthy amount of money in Rivian’s software expertise, the German automaker is also looking to expand its partnership with China’s Ecarx to develop and sell smart cars for developed markets like Europe and the United States.
According to an exclusive report from Reuters, the Geely-backed hardware and software company is already working with Volkswagen on smart cars in Brazil and India, where Ecarx’s Antora 1000 digital cockpit system is being used. It features the Chinese-based firm’s proprietary chip and software and offers features such as voice recognition and navigation apps.
Yet it could go elsewhere soon. “The two companies are now looking to extend the partnership to include VW’s Skoda-branded cars sold in Europe and also exploring the possibility of launching vehicles that are equipped with Ecarx technologies in the U.S., Ecarx CEO Shen Ziyu told Reuters.”
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Volkswagen is one of the car manufacturers that have had it particularly hard in China. After decades of being the top-selling brand, it was dethroned by the local competition. The fact that it poured billions into its in-house software division Cariad, only to deal with countless delays and tech issues, certainly didn’t help.
Cariad was supposed to deliver the software for the Volkswagen Group’s new EVs. It eventually did that, but only after starting from scratch a second time and after delaying the launch of the Audi Q6 E-Tron for more than a year.
“China’s brutal cost competition can hammer out a stronger supply chain for us to go global,” Ecarx CEO Shen Ziyu told Reuters. “The product cycle, which may only last three years in China, can be extended to 10 or even 15 years overseas.”
That’s a huge difference and goes to show, once again, how far ahead China is in the smart car game.
In case you were wondering, a “smart car” is more or less like a smartphone on wheels. It offers easy access to apps, has voice recognition, and maybe even an artificial intelligence assistant. It’s very customizable and, more importantly, everything works.
All this being said, there is one potential problem with Volkswagen’s plan. The U.S. has proposed banning cars with digital links to China from 2027. This is part of why Volkswagen chose to unite with Rivian; it needed a first-rate software partner that wouldn’t face barriers in this part of the world.
But just like China’s EVs themselves, it’s hard to believe that such advanced technology won’t find its way to U.S. or European roads eventually. More and more automakers are turning to partnerships with China’s automakers to up their game, and that could ultimately be their way in.
